LAW FOR ALL

Friday, January 8, 2021

whether the acceptance of a conditional offer with a further condition results in a concluded contract, irrespective of whether the offerer accepts the further condition proposed by the acceptor

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7469 OF 2008

M/s. Padia Timber Company(P) Ltd. …Appellant

versus

The Board of Trustees of Visakhapatnam

Port Trust Through its Secretary …Respondent

J U D G M E N T

Indira Banerjee, J.

The short question involved in this appeal is, whether the

acceptance of a conditional offer with a further condition results in a

concluded contract, irrespective of whether the offerer accepts the

further condition proposed by the acceptor. This question does not

appear to have been addressed by the High Court or the Court below.

2. This appeal is against a common Judgment and Order dated

10.10.2006 passed by the High Court of Judicature at Hyderabad in

Appeal Nos.2196 and 2197 of 2000 confirming a Judgment and Order

dated 31.3.2000 of the Additional Senior Civil Judge, Visakhapatnam

allowing the suit being O.S. No.106 of 1993 filed by the RespondentPort Trust against the Appellant for damages, and dismissing O.S.

No.450 of 1994 filed by the Appellant for refund of earnest deposit.

3. On or about 17.7.1990, the Respondent-Port Trust floated a

tender for supply of Wooden Sleepers. The tenders were due to be

opened on 01.08.1990.

4. Clauses 15 and 16 of the tender are extracted hereinbelow:-

“15. The purchaser will not pay separately for transit

insurance and the supplier will be responsible till the entire

stores contracted for arrive in good condition at destination.

The consignee will as soon as but not later than 30 days of

the date of arrival of stores at destination notify the supplier

of any loss, or damage to the stores that may have occurred

during transit.

16. In the event of the supplies being found defective in any

matter the right to reject such materials and return the same

to the supplier and recover the freight by the Port is

reserved.”

5. Pursuant to the aforesaid tender, the Appellant submitted its

offer on or about 01.08.1990. It was a specific condition of the offer

of the Appellant that inspection of the Sleepers, as per the

requirement of the Respondent-Port Trust, would have to be

conducted only at the depot of the Appellant. The Appellant did not

accept Clauses 15 and 16 of the Tender and rather made a counter

proposal. In accordance with the terms and conditions of the tender,

the Appellant deposited Rs.75,000/- towards earnest deposit, along

with its quotation.

6. On or about 02.08.1990, the Controller of Stores of the

Respondent-Port Trust informed the tenderers that the opening of the

tenders had been postponed to 08.08.1990.

7. On 08.08.1990, the Appellant submitted its revised quotation

and/or offer, reiterating that inspection as per the requirement of the

Respondent-Port Trust would have to be conducted only at the depot

of the Appellant. After the tenders were opened certain discussions

took place between the Appellant and the Tender Committee of the

Respondent-Port Trust.

8. By a letter dated 11.10.1990, the Appellant agreed to supply

wooden sleepers to the Respondent-Port Trust on the terms and

conditions stipulated in the said letter. The Appellant reiterated that

the Respondent-Port Trust could inspect the goods to be supplied, at

the factory site of the Appellant at Vepagunta, Visakhapatnam, as

this would facilitate re-transit of rejected goods to the depot of the

Appellant, without additional financial burden.

9. The Appellant made it clear to the Respondent-Port Trust,

that if the Respondent-Port Trust still required inspection at the site of

the Respondent-Port Trust, the Appellant would charge 25% above

the rate quoted by the Appellant for the supply of wooden sleepers.

The said letter is extracted hereinbelow for convenience:-

1. “We are agreeable to supply the B.G Track Indian sale

wood sleepers F.D.R V.P.T site by our own transportation.

2. With regard to inspection clause you can inspect the

material at our factory site at Vepagunta, Visakhapatnam.

This will facilitate us to retransist the rejected materials if

any to our the depot without any additional financial

commitment. If you still require inspection, at your site we

will charge 25% extra in our rate.

3. As the tender committee had mentioned during the

discussion on 10.10.90, we are agreeable to the condition

for the 100 % payment a weekday, after acceptance of the

materials.

4. We charge 24 % interest on all belated payments.

5. We can immediately supply two thousand of BG Tracks

sleepers and the supply can be completed as per your

requirement.

6. We are regular supplier of sleepers to Indian Railways.

We wish to extend our transaction with the V.P.T.

7. We will execute 10% of security deposit as on bank

guarantee and also you have refund to our E.M.D amount of

Rs 75,000/- awaiting your favourable order."

10. Thereafter, further correspondence ensued between the

parties. By another letter dated 20.10.1990 addressed to the

Controller of stores of the Respondent-Port Trust, the Appellant

reiterated that it had not agreed to inspection at the General Stores

of the Respondent-Port Trust. The Appellant made it clear that, in the

event the Respondent-Port Trust insisted on inspection at the General

Stores of the Respondent-Port Trust, the Appellant would charge 24%

extra instead of 25% as mentioned in its earlier letter. The said letter

dated 20.10.1990 was duly received by the Respondent-Port Trust.

11. By a letter dated 29.10.1990, written in response to the

quotations dated 1.8.1990, 8.8.1990 and the letter dated 20.10.1990

of the Appellant, the Respondent-Port Trust informed the Appellant

that the Respondent-Port Trust had accepted the offer of the

Appellant for supply of wooden sleepers at the rate quoted by the

Appellant. Though the Respondent-Port Trust agreed that the

Inspection Committee would inspect the Wooden Sleepers at the site

of the Appellant, the Respondent-Port Trust imposed the further

condition that the Appellant would have to transport the Wooden

Sleepers to the General Stores of the Respondent-Port Trust by road,

at the cost of the Appellant and the final inspection would be made

at the General Stores of the Respondent-Port Trust. The RespondentPort Trust also requested the Appellant to extend the delivery period

of the sleepers until 15.11.1990.

12. By a letter dated 30.10.1990 written in response to the letter

dated 29.10.1990, the Appellant informed the Controller of Stores of

the Respondent-Port Trust that the Appellant was not accepting the

terms and conditions stipulated in the said letter dated 29.10.1990,

which were not as per the Appellant’s offer. The Appellant also

declined to extend the validity of its offer, since prices had gone up.

13. By the aforesaid letter dated 30.10.1990, the Appellant

rejected the proposal of the Respondent-Port Trust and requested that

the earnest money deposited by the Appellant be returned to the

Appellant.

14. It appears that on the same day, i.e. 30.10.1990, the

Controller of Stores of the Respondent-Port Trust put up an Office

Note, seeking sanction of the Chairman of the Respondent-Port Trust

for placing orders on the Appellant for supply of 10,596 Broad Gauge

Track Sleepers and 761 Broad Gauge special size sleepers, at a total

cost of Rs.67,96,764 odd, for which a Letter of intent cum purchase

order dated 29.10.1990 had been issued by the Respondent-Port

Trust.

15. A purchase order No. G 101126 90-91 dated 31.10.1990 was

issued to the Appellant from the office of the Controller of Stores of

the Respondent-Port Trust, requesting the Appellant to supply 10596

Broad Gauge Track Sleepers and 761 Broad Gauge Special Sleepers of

Ist Class Salwood as per the latest Indian Railway Standards, on the

terms and conditions specified in the Purchase Order and the Special

Conditions of purchase appended thereto, according to the

specifications and at the rates mentioned in the Purchase Order.

16. The Letter of intent and the purchase order were followed by a

letter dated 12.11.1990, written in response to the letter dated

30.10.1990 of the Appellant. By the aforesaid letter, the RespondentPort Trust requested the Appellant to supply the materials ordered as

per the purchase order, inter alia, contending that the purchase order

had duly been placed on the Appellant within the period of validity of

the price quoted by the Appellant, after issuing a letter of intent to

the Appellant, accepting its offer. The Appellant was warned that if

supply was not made as per the purchase order, risk purchase would

be made at the cost of the Appellant and the Earnest Deposit of

Rs.75,000 would be forfeited. The Respondent-Port Trust also noted

that the Appellant had not made the security deposit, to which the

purchase order was subject.

17. By another letter dated 19.11.1990, the Respondent-Port Trust

requested the Appellant to commence supply of materials. In

response to the said letter, the Appellant wrote a letter dated

27.11.1990 to the Respondent-Port Trust, contending that that there

was no concluded contract between the Appellant and the

Respondent-Port Trust and once again requested that the earnest

money deposited by the Appellant with the Respondent-Port Trust be

refunded to the Appellant.

18. On or about 03.9.1991, that is, after ten months, the

Respondent-Port Trust placed an order for supply of wooden sleepers

on M/s. Chhawohharia Machine Tools Corporation, for supply of

wooden sleepers at a much higher rate.

19. The Respondent-Port Trust has contended that, by reason of

refusal of the Appellant to discharge its obligation of supplying the

requisite number of sleepers, as required by the Respondent-Port

Trust, to the Respondent-Port Trust, in terms of the contract, at the

rate quoted by the Appellant in its revised bid, the Respondent-Port

Trust had been constrained to invoke the risk purchase clause as

contained in Paragraph 16 of the Special Conditions of purchase,

appended to the purchase order dated 31.10.1990 and purchase the

wooden sleepers at a higher rate from a third party, incurring losses,

for which the Respondent-Port Trust was entitled to claim damages.

It is the case of the Respondent-Port Trust that the conditions

stipulated in the purchase order, including the Special Conditions of

Purchase constitute the terms of a binding contract.

20. According to the Appellant the negotiations between the

Appellant and the Respondent-Port Trust did not fructify into a

concluded contract, since the Respondent-Port Trust did not accept

the conditions of the offer of the Appellant fully and the Appellant

did not agree to the terms and conditions on which the the

Respondent-Port Trust insisted, particularly the condition of final

inspection at the General Stores of the Appellant.

21. On or about 10.4.1992, the Respondent-Port Trust filed the

suit being O.S. No.106 of 1993 in the Court of II Additional

Subordinate Judge, Visakhapatnam against the Appellant, seeking

damages for breach of contract to the tune of Rs.33,19,991/- along

with interest thereon. The Appellant duly filed its written statement

in the said suit on or about 23.3.1994.

22. In or about June, 1994, the Appellant filed the suit being O.S.

No.450 of 1994 in the Court of Subordinate Judge, Visakhapatnam

claiming refund of earnest money deposited by the Appellant with

the Respondent-Port Trust along with interest @ 24% per annum from

24.4.1991 to 23.4.1993, costs and other consequential reliefs. The

Respondent-Port Trust filed a written statement denying its liability to

refund the earnest deposit.

23. The two suits being O.S. No.106/1993 and O.S. No.450/1994

were clubbed together and heard by the First Additional Senior Civil

Judge, Visakhapatnam. In the first suit, the following issues were

framed for trial:-

(i) Whether the Appellant committed breach of contract?

(ii) Whether the Respondent-Port Trust was entitled to recover

the suit amount from the defendant?

(iii) To what relief was the Respondent-Port Trust entitled?

24. In O.S. 450/1994 (the second suit), the issues were:-

(i) Whether the Appellant was entitled to refund of earnest

money with interest as claimed from the Respondent-Port Trust.

(ii) Whether the suit (second suit) was barred by limitation?

(iii) To what relief, if any, was the Appellant entitled?

25. Since the two suits were clubbed together and the issues in

the two suits were interlinked, common evidence was recorded for

the two suits. While one V. Adinarayana, who had been working in

the Stores Department of the Respondent-Port Trust at the material

time, was examined on behalf of the Respondent-Port Trust, Shri G. C.

Padia, who was the Director of the Appellant was examined on behalf

of the Appellant.

26. The two suits were disposed of together, by a common

judgment and order dated 31.3.2000. While the first suit was decreed

in favour of the Respondent-Port Trust, the second suit filed by the

Appellant was dismissed.

27. After discussing the pleadings and the contentions of the

respective parties, the Trial Court found that it had been admitted

that the Respondent-Port Trust had invited tenders for supply of

wooden sleepers, pursuant to which the Appellant had submitted its

bid.

28. The Trial Court held that the Respondent-Port Trust had

accepted the offer of the Appellant and issued a letter of intent cum

purchase order on 29.10.1990, that is, within the period of validity of

the price quoted by the Appellant. The price quoted by the Appellant

was valid till 31.10.1990.

29. The Trial Court rejected the contention of the Appellant that

the Appellant had revoked its offer before acceptance thereof by the

Respondent-Port Trust, and held that there was a concluded contract

between the Appellant and the Respondent-Port Trust, since the

Respondent-Port Trust had accepted the tender submitted by the

Appellant on 29.10.1990, while the price quoted by Appellant was

still valid. The Trial Court held that the contract was concluded on

29.10.1990 when the letter of intent was issued by the RespondentPort Trust.

30. The Trial Court observed that, in order to determine whether

or not there was a concluded contract between the Appellant and the

Respondent-Port Trust, the crucial question was whether the tender

submitted by the Appellant had been accepted by the RespondentPort Trust within 31st October, 1990, being the stipulated period of

validity of the quotation given by the Appellant. The Trial Court found

that acceptance of the purchase order was completed as against the

Appellant, when the letter of intent cum purchase order was

dispatched from the end of the Respondent-Port Trust.

31. In arriving at the finding that there was a concluded contract

between the Respondent-Port Trust and the Appellant, the Trial Court

relied on Section 4 of the Indian Contract Act, 1872, which is set out

hereinbelow for convenience:

“4. Communication when complete.—The

communication of a proposal is complete when it comes to

the knowledge of the person to whom it is made.

The communication of an acceptance is complete,—

as against the proposer, when it is put in a course of

transmission to him, so as to be out of the power of the

acceptor;

as against the acceptor, when it comes to the knowledge of the

proposer.

The communication of a revocation is complete,—

as against the person who makes it, when it is put into a course

of transmission to the person to whom it is made, so as to be out

of the power of the person who makes it;

as against the person to whom it is made, when it comes to his

knowledge.”

32. The Trial Court found that it had been proved that there was a

concluded contract between the Appellant and the Respondent-Port

Trust, but the Appellant had admittedly not supplied the wooden

sleepers to the Respondent-Port Trust. Once it was proved that there

was a concluded contract and the defendant that is, the Appellant

before this Court, had admittedly not supplied the goods as per the

terms of the purchase order, it had to be held that the defendant had

committed breach of contract. The Trial Court, in effect, held that the

fact that the Appellant had received the letter of intent and endorsed

the receipt thereof within 31st October, 1990, established the case of

the Respondent that the contract had been concluded.

33. The Trial Court held that the Appellant having committed

breach of its obligations under a concluded contract with the

Respondent-Port Trust, the Respondent Port Trust was entitled to

damages as claimed in the suit being O.S. No.106 of 1993. In

awarding damages to the Respondent-Port Trust, the Trial Court took

note of Section 73 of the Contract Act which is set out hereinbelow for

convenience:

"73. Compensation for loss or damage caused by

breach of contract.—When a contract has been broken, the

party who suffers by such breach is entitled to receive, from

the party who has broken the contract, compensation for any

loss or damage caused to him thereby, which naturally arose

in the usual course of things from such breach, or which the

parties knew, when they made the contract, to be likely to

result from the breach of it.”

34. The Trial Court held that in case of breach of a contract for

supply of goods, the Port could claim the difference between the

contracted price and the market price of such goods at the place of

delivery, as damages. If there was no available market price at the

nearest place, the price prevailing in the controlling market could be

considered.

35. The Trial Court considered the judgments in Rajasthan State

Electricity Board and Others v. Dayal Wood Works

; Fateh

Chand v. Balkishan Das

; G.M.T.A.P. Co-op. Mkts. Ltd. v. Dy.

Registrar, Co-op Societies, Raichur

; Marimuthu Gounder v.

Ramaswamy Gounder and Ors.

cited by the Appellant and the

judgments in A.K.A.S. Jamal v. Moola Dawood Sons & Co.

; M/s

Saraya Distillery, Sardarbaggar v. Union of India and Anr.

;

Murlidhar Chiranjilal v. M/s Harishchandra Dwarkadas and

Anr.

; State of Maharashtra and Anr. v. Digambar Balwant

Kulkarni

cited by the Respondent-Port Trust.

36. Relying on the judgment of the Division Bench of Delhi High

Court in M/s Saraya Distillery, Sardarbaggar v. Union of India

1. AIR 1998 AP 381

2. AIR 1963 SC 1405

3. AIR 1998 Karnataka 354

4. AIR 1979 Madras 189

5. AIR 1915 Privy Council 48

6. AIR 1984 Delhi 360

7. AIR 1962 SC 366 (V49 C57)

8. AIR 1979 SC 1339

and Anr. (supra), the Trial Court held that proof of actual repurchase

was not necessary for claiming damages.

37. The Trial Court rejected the contention of the Appellant of

delay in calling for tenders from a third party, on the ground that the

Respondent-Port Trust being a statutory authority and not being a

private individual, was required to follow its rules and procedures in

calling for tenders and accepting the tender of a third party.

38. The Trial Court found that the contract was enforceable till its

completion or its abandonment. The rescission of the contract and

consequential forfeiture of security deposit was proper and within the

terms of the contract.

39. In Rajasthan State Electricity Board and others v. Dayal

Woods Works (supra), cited on behalf of the Appellant before the

Trial Court, the High Court had found on facts that there was no

concluded contract for supply of sleepers and consequently the

plaintiff was entitled to refund of security deposit.

40. In Fateh Chand (supra), cited on behalf of the Appellant

before the Trial Court, a five-Judge Bench of this Court held:-

“10 …...In assessing damages the Court has, subject to the

limit of the penalty stipulated, jurisdiction to award such

compensation as it deems reasonable having regard to all the

circumstances of the case. Jurisdiction of the Court to award

compensation in case of breach of contract is unqualified

except as to the maximum stipulated; but compensation has to

be reasonable, and that imposes upon the Court duty to award

compensation according to settled principles. The section

undoubtedly says that the aggrieved party is entitled to

receive compensation from the party who has broken the

contract, whether or not actual damage or loss is proved to

have been caused by the breach. Thereby it merely dispenses

with proof of “actual loss or damage”; it does not justify the

award of compensation when in consequence of the breach no

legal injury at all has resulted, because compensation for

breach of contract can be awarded to make good loss or

damage which naturally arose in the usual course of things, or

which the parties knew when they made the contract, to be

likely to result from the breach.

11. …..In all cases, therefore, where there is a stipulation

in the nature of penalty for forfeiture of an amount

deposited pursuant to the terms of contract which

expressly provides for forfeiture, the court has jurisdiction

to award such sum only as it considers reasonable, but

not exceeding the amount specified in the contract as

liable to forfeiture.”

41. In Marimuthu Gounder (supra), also cited by the Appellant,

before the Trial Court, a Division Bench of Madras High Court held

that proof of actual damage was a sine qua non to seek damages and

in G.M.T.A.P. Co-op. Mkts. Ltd. v. Dy. Registrar, Co-op

Societies, Raichur (supra) a Single Bench of Karnataka High Court

held that penalty could not be imposed on a milling agent for default

in supply of rice, in the absence of pre-estimation of the loss suffered

on account of the default, even though the contract may have

provided for imposition of penalty.

42. In Murlidhar Chiranjilal (supra), cited on behalf of the

Respondent-Port Trust this Court held:-

“9. The two principles on which damages in such cases are

calculated are well-settled. The first is that, as far as possible,

he who has proved a breach of a bargain to supply what he

contracted to get is to be placed, as far as money can do it, in

as good a situation as if the contract had been performed; but

this principle is qualified by a second, which imposes on a

plaintiff the duty of taking all reasonable steps to mitigate the

loss consequent on the breach, and debars him from claiming

any part of the damage which is due to his neglect to take

such steps: (British Westinghouse Electric and Manufacturing

Company Limited v. Underground Electric Railways Company

of London [(1912) AC 673, 689] ). These two principles also

follow from the law as laid down in Section 73 read with the

Explanation thereof. If therefore the contract was to be

performed at Kanpur it was the respondent's duty to buy the

goods in Kanpur and rail them to Calcutta on the date of the

breach and if it suffered any damage thereby because of the

rise in price on the date of the breach as compared to the

contract price, it would be entitled to be re-imbursed for the

loss. Even if the respondent did not actually buy them in the

market at Kanpur on the date of breach it would be entitled to

damages on proof of the rate for similar canvas prevalent in

Kanpur on the date of breach, if that rate was above the

contracted rate resulting in loss to it. But the respondent did

not make any attempt to prove the rate for similar canvas

prevalent in Kanpur on the date of breach. Therefore it would

obviously be not entitled to any damages at all, for on this

state of the evidence it could not be said that any damage

naturally arose in the usual course of things.”

43. In State of Maharashtra and Anr. v. Digambar Balwant

Kulkarni (supra), cited on behalf of the Respondent-Port Trust this

Court held that a contract could not be rescinded after the expiry of

the due date for the purpose thereof. Abandonment of the contract

work after expiry of the due date for the purpose would amount to

breach, giving rise to a claim for damages against the party in

breach.

44. In A.K.A.S. Jamal v. Moola Dawood Sons & Co. (supra),

the Privy Council held that a plaintiff who sues for damages owes the

duty of taking all reasonable steps to mitigate the loss consequent

upon the breach and cannot claim as damages any sum which is

incurred due to his own neglect.

45. The High Court has dismissed the appeals filed by the

Appellant, holding that the Trial Court had, on consideration of the

entire evidence and materials available on record decreed the suit

filed by the Respondent-Port Trust and dismissed the claim of the

Appellant.

46. Observing that the main submission made on behalf of the

respective parties before the High Court swirled around whether there

was any concluded contract or not, the High Court noted the following

judgments cited on behalf of the Appellant in this regard:-

(i) Visakhapatnam Port Trust, Visakhapatnam and Anr. v.

Bihar Alloy Steels Ltd. And Ors.

(ii) Raghunandhan Reddy v. The State of Hyderabad thr.

The Secretary to Government Revenue Department

(iii) Mahesh Transport Co. v. T. & D. Workers’ Union

(iv) M.V. Shankar Bhat and Anr. v. Claude Pinto since (D) by

Lrs. and Ors.

(v) Jawahar Lal Burman v. Union of India

(iv) U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd. And

Ors.

9. 1991 (1) A.L.T. 582

10. AIR 1963 AP 110

11. AIR 1974 SC 868

12. (2003) 4 SCC 86

13. AIR 1962 SC 378

14. AIR 1996 SC 1373

47. In the judgment and order under appeal, the High Court has

not discussed any of the judgments referred to above. The High

Court simply recorded the contention of the Appellant that there was

no previous approval of the Board of Trustees as contemplated under

Section 34(1) of the Major Port Trusts Act, 1963, and therefore, no

enforceable contract.

48. In Visakhapatnam Port Trust, Visakhapatnam and Anr.

v. Bihar Alloy Steels Ltd. and Ors. (supra) a Division Bench of the

High Court held:

“17. In the instant case the provisions of S. 34 prescribe the

manner in which a contract is to be made on behalf of the

Board of Trustees and further sub-section (3) contains a

prohibition that a contract not made in accordance with the

earlier portions of Section shall not be binding on the Board. It

has been held by the Supreme Court in its decision reported

in H.S. Rokhy v. New Delhi Municipality AIR 1962 SC 554 that

the effect of such a prohibition as is contained in sub-sec. (3)

of S. 34 renders the contract itself void and unenforceable. In

that case the controversy was about estoppel against New

Delhi Municipal Corporation which was governed by the Punjab

Municipal Act, 1911, which contains a similar provision viz., S.

47.”

49. In Visakhapatnam Port Trust, Visakhapatnam and Anr.

v. Bihar Alloy Steels Ltd. and Ors. (supra) this Court held that the

promise as contained in the letter of Traffic Manager to lease an area

of port trust was void and unenforceable against the Board of

Trustees, there being no contract made in accordance with Section 34

of the Major Port Trusts Act.

50. In Raghunandhan Reddy v. The State of Hyderabad thr.

The Secretary to Government Revenue Department (supra), a

Division Bench of the High Court held:

“8. It is a well-established principle of law that only when an offer

is accepted that the contract is concluded and binds the parties.

It is equally well-settled that before an offer is accepted, the

offerer can withdraw his offer, but if the acceptance is conditional

or is not final, then there is no concluded contract.”

51. The judgment of this Court in Mahesh Transport Co. v.

Transport and Dock Workers’ Union (supra), which relates to

the validity and propriety of the reference of an industrial dispute

under Section 10(1) of the Industrial Disputes Act, 1947, apparently

has no relevance to the issues involved in this case. In M.V.

Shankar Bhat and Anr. v. Claude Pinto since (D) by Lrs. and

Ors. (supra), this Court held that an agreement which was subject

to ratification by heirs under a will who were not parties to the

agreement did not create a conclusive contract. The relevance of

the judgment is unexplained.

52. In U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd.

And Ors. (supra) this Court held that a contract by a Government

Notification is not binding unless it is executed in accordance with

its Articles of Association.

53. The High Court found that there was no dispute that tenders

had been called for and that it was the case of the Respondent Port

Trust that the offer of the Appellant had in fact been accepted and

purchase order issued on 31st October, 1990 under registered Post

that had been acknowledged but refused by the Appellant. The High

Court also recorded the contention of the Appellant that in the

absence of previous approval from the Board of Trustees of the

Respondent-Port Trust, under the proviso to Section 34(1) of the Major

Port Trust Act 1963, there could be no enforceable contract. Even

though the High Court referred to the submission of the Appellant

that the letter of intent was subject to ratification by the Board and

and the only witness of the Respondent-Port Trust had admitted that

no contract had been concluded, the High Court did not deal with the

same. The High Court observed:

“….The main reliance placed by the Visakhapatnam Port Trust

under Clause 16 of the tender conditions in Ex.A.1, was that in

the event of non-supply of the material, the Port Trust has

right to cancel the contract itself whereas the case of the

Company was that there was no contract at all. Therefore,

one has to see whether there was really any concluded or

enforceable contract before one could blame the other. There

has been a quite re-assertion through the evidence on behalf

of the Port Trust by P.W.1. There is a reference to a mention in

Ex.A.8 as to the ratification by the Board, which according to

the M/s Padia Timber Company Pvt. Ltd., nothing is

forthcoming. Further, P.W.1 during his cross-examination,

stated that it is true that the contract was not concluded.

However, that itself cannot be a reflection on the nature of

intent, which could follow the facts and circumstances in the

documents, which are staring at. It is to be seen that even

according to the M/s Padia Timber Company Pvt. Ltd., and as

per its letter dated 27.11.1990 ex.A.10, the M/s Padia Timber

Company Pvt., Ltd., admitted about the receipt of the letter

dated 29.10.1990 and the acceptance of tender which is valid

for three months. Therefore, having regard to the letter in

Ex.A.10 mentioning about the acceptance of the tender on

29.10.1990, it is not open to the M/s Padia Timber Company

Pvt. Ltd., to fall back and say that there was no acceptance at

all nor there was any concluded contract. The Court below

was rightly held that the tender of the defendant was duly

accepted on 29.10.1990 which was followed by the purchaser

order on 31.10.1990 and that itself is more enough to show

that there was concluded and enforceable contract. Thus,

nothing lies in the mouth of the M/s Padia Timber Company

Pvt. Ltd., to say that there was no concluded contract.

Further, having regard to facts and circumstances and

admittedly there being no steps at all in terms of such

acceptance, the breach squarely falls only on the M/s Padia

Timber Company Pvt. Ltd. and therefore, the Visakhapatnam

Port Trust has rightly forfeited the amount and the Court below

was rightly held that the said plaintiff namely the

Visakhapatnam Port Trust is entitled for the amounts as

claimed. Following the same and consequently to the said

findings which go to the very root of the case itself, the claim

as made by the M/s Padia Timber Company Pvt. Ltd., for

refund in the other suit also squarely falls to ground with the

self-same reasons. Hence, we do not find any merits in these

appeals...”

54. With the greatest of respect, the High Court has cursorily dealt

with the contentions of the Appellant and has not even discussed the

cases that had been cited on behalf of the Appellant.

55. The Trial Court relied on Section 4 of the Contract Act, but

completely overlooked Section 7. Section 7 of the Indian Contract

Act, 1872 is set out hereinbelow for convenience:-

“7. Acceptance must be absolute.—In order to convert a

proposal into a promise the acceptance must— —In order to

convert a proposal into a promise the acceptance must—"

(1) be absolute and unqualified;

(2) be expressed in some usual and reasonable manner, unless

the proposal prescribes the manner in which it is to be accepted.

If the proposal prescribes a manner in which it is to be accepted,

and the acceptance is not made in such manner, the proposer

may, within a reasonable time after the acceptance is

communicated to him, insist that his proposal shall be accepted

in the prescribed manner, and not otherwise; but, if he fails to do

so, he accepts the acceptance.”

56. It is a cardinal principle of the law of contract that the offer

and acceptance of an offer must be absolute. It can give no room for

doubt. The offer and acceptance must be based or founded on three

components, that is, certainty, commitment and communication.

However, when the acceptor puts in a new condition while accepting

the contract already signed by the proposer, the contract is not

complete until the proposer accepts that condition, as held by this

Court in Haridwar Singh v. Bagun Sumbrui and Ors.

acceptance with a variation is no acceptance. It is, in effect and

substance, simply a counter proposal which must be accepted fully

by the original proposer, before a contract is made.

57. In Union of India v. Bhim Sen Walaiti Ram16

, a three-Judge

Bench of this Court held that acceptance of an offer may be either

absolute or conditional. If the acceptance is conditional, offer can

be withdrawn at any moment until absolute acceptance has taken

place.

58. In Jawahar Lal Burman v. Union of India (supra),

referred to by the High Court, this Court held that under Section 7

of the Contract Act acceptance of the offer must be absolute and

unqualified and it cannot be conditional. However, in the facts and

circumstances of that case, on a reading of the letter of acceptance

as a whole, the Appellant’s argument that the letter was intended

to make a substantial variation in the contract, by making the

deposit of security a condition precedent instead of a condition

15 AIR 1972 SC 1242

16 (1969) 3 SCC 146

subsequent, was not accepted.

59. The High Court also overlooked Section 7 of the Contract Act.

Both the Trial Court and the High Court over-looked the main point

that, in the response to the tender floated by the Respondent-Port

Trust, the Appellant had submitted its offer conditionally subject to

inspection being held at the Depot of the Appellant. This condition

was not accepted by the Respondent-Port Trust unconditionally. The

Respondent-Port Trust agreed to inspection at the Depot of the

Appellant, but imposed a further condition that the goods would be

finally inspected at the showroom of the Respondent-Port Trust. This

Condition was not accepted by the Appellant. It could not, therefore,

be said that there was a concluded contract. There being no

concluded contract, there could be no question of any breach on the

part of the Appellant or of damages or any risk purchase at the cost

of the Appellant. The earnest deposit of the Appellant is liable to be

refunded.

60. Since we hold that the Appellant was neither in breach nor

liable to damages, it is not necessary for us to examine the questions

of whether the compensation and/or damages claimed by the

Respondent Port Trust was reasonable or excessive, whether claim

for damages could only be maintained subject to proof of the actual

damages suffered, and whether the Respondent Port Trust had taken

steps to mitigate losses. We also need not embark upon the

academic exercise of deciding whether prior approval of the Board of

Trustees is a condition precedent for creation of a valid contract for

supply of goods, or whether post facto ratification by the Board

would suffice.

61. The Appellant was entitled to refund of earnest money

deposited with the Respondent-Port Trust. The earnest money shall

be refunded within four weeks with interest @ 6% per annum from

the date of institution of suit No.450 of 1994 till the date of refund

thereof.

62. The appeal is, accordingly, allowed. The Judgment and order

of the High Court under appeal as also the common judgment and

order of the Trial Court in O.S. No.106 of 1993 and O.S. No.450 of

1994 are set aside. There will be no order as to costs.

.................................J

(NAVIN SINHA)

.................................J

(INDIRA BANERJEE)

JANUARY 05, 2021

NEW DELHI

in view of order dated 29.06.2019, the registration in favour of Amarnath Yadav (CA-2) and of certificate of clearance dated 16.08.2018 having been set aside, there was no right in respondent No.1 to claim the release of the vehicle. The order of the High Court, thus, is unsustainable and is hereby set aside.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 6 of 2021

(arising out of SLP (Crl.) No.3893/2020)

SREI EQUIPMENT FINANCE LTD. ...APPELLANT(S)

VERSUS

RAMJAN ALI & ORS. ...RESPONDENT(S)

J U D G M E N T

ASHOK BHUSHAN,J.

Leave granted.

2. This appeal has been filed challenging the

judgment dated 28.01.2020 of High Court of Judicature

at Allahabad, Lucknow Bench allowing the application

under Section 482 Cr.P.C. filed by respondent No.1.

By impugned judgment, High Court has directed for

release of vehicle JCB No.UP 51 AT 5709 in favour of

the respondent No.1. The appellant, who was

respondent No.3 before the High court aggrieved by

the judgment has come up in this appeal.

3. Brief facts of the case and events necessary to

be noted for deciding this appeal are:-

3.1 One Amarnath Yadav purchased the JCB machine

and entered into a finance agreement dated

22.10.2016 with the appellant under which

agreement the appellant financed an amount of

Rs.19,83,360/-. Under the agreement, Shri

Amarnath Yadav (hereinafter referred to as

“original owner”) agreed to repay the loan in

46 monthly instalments @ Rs.56,300/- for each

month from 15.12.2016 to 15.09.2020.

3.2 The original owner being resident of District

Basti, State of Uttar Pradesh applied for

registration of the vehicle to the Regional

Transport Officer, Basti. The vehicle was

registered by Regional Transport Officer,

Basti, Shri Amarnath Yadav as owner of JCB

machine bearing Registration No. UP 51 AT

5709 and there being agreement of finance

with appellant, in the registration

certificate the entry was made of the

appellant as person in whose favour the

vehicle was hypothecated as required by

Section 51 of the Motor Vehicles Act, 1988.

The original owner failed to pay any

instalment of loan. The appellant as per

terms of the finance agreement dated

22.10.2016 referred the dispute to an

arbitrator. The arbitrator proceeded to

decide the reference as per Arbitration and

Conciliation Act, 1996. Notices were issued

by Arbitrator to original owner. Original

owner failed to appear before the arbitrator.

The arbitrator gave an award dated 26.03.2018

in favour of the appellant namely M/s. Srei

Equipment Finance Private Limited for an

amount of Rs.25,97,053/- with interest @ 10%

p.a. from the date of notice of termination

(07.03.2017).

3.3 The original owner made an application with

the Regional Transport Officer, Basti praying

for seeking cancellation of entry of the

appellant as person with whom the vehicle was

hypothecated. Regional Transport Officer,

Basti issued an order on 16.08.2018

cancelling the entry of appellant as

financer. The Regional Transport Officer,

Basti without any information to the

appellant cancelled the entry of the

appellant from the registration certificate

and issued a fresh registration certificate

in the name of original owner. On

16.08.2018, the Regional Transport Officer,

Basti issued a clearance certificate in

favour of original owner noticing the fact

that vehicle has been sold to Ramjan Ali, the

respondent No.1 in the jurisdiction of other

registration authority, i.e., Sitapur.

3.4 On the basis of clearance certificate issued

by Regional Transport Officer, Basti, the

respondent No.1, Ramjan Ali submitted an

application for certificate of registration

to Transport Department, Sitapur and a

registration certificate dated 27.08.2018 was

issued in the name of Ramjan Ali as owner.

The registration certificate dated 27.08.2018

also noted the entry of hypothecation in

favour of Magma Fincorp Limited. The

respondent No.1 after obtaining transfer from

original owner has been using the vehicle.

3.5 On 09.01.2019, the vehicle was taken

possession by four persons, with regard to

which an FIR Case Crime No.08 of 2019 under

Sections 364 and 392 was lodged by respondent

No.1, Ramjan Ali in Police Station Sidhauli

District Sitapur. The vehicle was seized on

27.01.2019 by the police. Ramjan Ali filed

an application before the Chief Judicial

Magistrate, Sitapur for release of the

vehicle No. UP 51 AT 5709. Police submitted

a report before the Chief Judicial

Magistrate, Sitapur on the application of

respondent No.1. The appellant also appeared

before Chief Judicial Magistrate, Sitapur and

filed an objection claiming to be the

financer of the vehicle. The appellant’s

objection stated that the registration

certificate, which was in the name of

Amarnath Yadav, the original owner, there was

entry in favour of appellant as the person

with whom the vehicle was hypothecated. The

original owner had not paid any amount and an

award dated 26.03.2018 was passed in favour

of the appellant against the original owner.

Objection further stated that original owner

and respondent No.1 had manufactured

fraudulent documents and in collusion with

officials of Regional Transport Office, Basti

had managed to obtain clearance certificate

dated 16.08.2018. The Regional Transport

officer, Sitapur had transferred the vehicle

and registration of the vehicle in the name

of respondent No.1 which is illegal. The

Chief Judicial Magistrate after noticing the

case of the respondent No.1 as well as the

appellant, who had filed a detailed

objections observed that there is a dispute

over ownership of vehicle between respondent

No.1 and appellant and hence there is no

justifiable ground to release the vehicle in

favour of any of the parties. The

application filed by respondent No.1 for

release as well as the objection of the

appellant were rejected by order dated

04.05.2019. Before the aforesaid order dated

04.05.2019 was passed, the appellant filed an

application before the Regional Transport

Officer, Basti on 30.04.2019 claiming that

the appellant was person with whom the

vehicle was hypothecated and entry of

hypothecation in favour of the appellant in

the registration certificate was got

cancelled on the basis of forged Form-35 and

the clearance certificate was wrongly issued

in favour of original owner for transfer of

the vehicle.

3.6 The Regional Transport Officer after receipt

of the application by the appellant dated

30.04.2019 issued notices to original owner

on 30.04.2019, 08.05.2019, 15.05.2019 and

01.06.2019, the original owner did not appear

before the Regional Transport Officer nor

gave any reply. The Assistant Regional

Transport Officer after considering the

materials produced by the appellant by

application dated 30.04.2019 and other

materials passed an order on 29.06.2019

setting aside the order of cancellation of

finance agreement as well as the no objection

certificate earlier issued by Regional

Transport Officer, Basti. The Regional

Transport Officer held that registration

certificate issued by Regional Transport

Officer, Basti in Form-23 in respect of

vehicle(JCB Machine) bearing No. UP 51 AT

5709 and no objection certificate shall be

treated as null and void. The Assistant

Regional Transport Officer also wrote to the

Superintendent of Police, Basti to register a

case under appropriate section of the Indian

Penal Code against the original owner.

3.7 The respondent No.1 filed an application

under Section 482 Cr.P.C. before the High

Court challenging the order dated 04.05.2019

passed by the Chief Judicial Magistrate

rejecting his application for release of the

vehicle. The appellant was subsequently

impleaded as respondent No.3 in the

application under Section 482 Cr.P.C.

3.8 The High Court vide its impugned judgment

dated 28.01.2020 allowed the application

under Section 482 Cr.P.C., set aside the

order of Chief Judicial Magistrate dated

04.05.2019 and directed the release of the

vehicle in favour of respondent No.1 Ramjan

Ali. The appellant aggrieved by the said

order dated 28.01.2020 has come up in this

appeal.

4. On 27.10.2020 while issuing the notice following

order was passed:-

“Issue notice, returnable in four

weeks.

We further direct that the vehicle

bearing No.UP51AT-5709 in question shall

not be further transferred by the

respondent no.1.”

5. The counter affidavits have been filed by

respondent Nos.2 and 3 as well as respondent No.1.

6. We have heard learned counsel for the appellant,

learned counsel appearing for respondent No.1 as well

as learned counsel appearing for the State.

7. Learned counsel for the appellant submits that

the vehicle was registered with Regional Transport

Office, Basti in October, 2016 in the name of

Amarnath Yadav, the original owner, with entry of

appellant as a person with whom the vehicle was

hypothecated. The original owner failed to pay the

loan EMI and on a reference made to the arbitrator an

arbitration award dated 26.08.2018 was passed and

after the arbitration award having been passed

against the original owner, he hatched a plan to

cheat the appellant. The original owner by

submitting the forged documents including forged

Form-35, got cancelled the entry of appellant in the

registration certificate and a clearance certificate

was issued on 16.08.2018 by Regional Transport

Office, Basti. On the basis of clearance certificate

vehicle was got registered in the name of respondent

No.1 at Regional Transport Office, Sitapur. The

transfer by original owner was wholly illegal and

without jurisdiction. The vehicle having been

hypothecated to appellant, it could not have been

transferred without clearing the loan and without

consent of the appellant. The respondent No.1, who is

beneficiary of fraud was not entitled to the release

of the vehicle and the High Court committed an error

in releasing the vehicle in favour of respondent

No.1. It is further submitted that Regional

Transport Office, Basti having passed an order on

29.06.2019 cancelling the registration certificate

issued in the Form 23 as well as the No Objection

Certificate, High Court committed error in directing

the release of the vehicle in favour of respondent

No.1. The vehicle being hypothecated to appellant

and there being award against original owner, the

vehicle can neither be transferred to respondent No.1

nor there is any right in respondent No.1 to claim

the vehicle.

8. Learned counsel appearing for the respondent No.1

submits that respondent No.1 is bonafide purchaser,

who had paid amount of Rs.7,50,000/- to original

owner and has obtained finance of Rs.10 lakhs from

M/s. Magma Fincorp Limited, the vehicle was rightly

released by the High Court in his favour. It is

submitted that in the registration certificate, which

was produced by original owner, there was no entry of

the hypothecation in favour of the appellant. The

respondent No.1 has diligently obtained the transfer

and got the vehicle registered in his name with

Regional Transport Office, Sitapur. The JCB machine,

which was purchased by respondent No.1 was not under

any hire purchase agreement, there is no error in

purchase of the vehicle by respondent No.1. The

respondent No.1 after purchase of the vehicle has

obtained insurance cover and is paying the tax for

the use of JCB to registering authority, Sitapur.

The vehicle having been forcibly taken possession on

09.01.2019, the same has rightly been released to the

respondent No.1.

9. Learned counsel appearing for the State submits

that after register of the FIR investigation was

initiated by the Sub-Inspector and it was found that

Amarnath Yadav, the original owner died of cancer on

08.07.2019. In the counter affidavit filed by the

State, necessary facts of the case have been

mentioned.

10. We have considered the submissions of the learned

counsel for the parties and have perused the records.

11. The Motor Vehicles Act, 1988 contains detail

provisions regarding registration of vehicle,

transfer of ownership and special provisions

regarding motor vehicle subject to hire purchase

agreement. The present is a case where the appellant

had entered into hire purchase agreement with

original owner Amarnath Yadav on 22.10.2016. An

entry regarding hypothecation was made in the

registration certificate while registering the

vehicle No. UP 51 AT 5709. Section 51(1), (3) and

(4) which are relevant for the present case are as

follows:-

“51. Special provisions regarding motor

vehicle subject to hire-purchase

agreement, etc.—(1) Where an application

for registration of a motor vehicle which

is held under a hire-purchase, lease or

hypothecation agreement (hereafter in this

section referred to as the said agreement)

is made, the registering authority shall

make an entry in the certificate of

registration regarding the existence of

the said agreement.

XXXXXXXXXXXXX

(3) Any entry made under sub-section (1)

or sub-section (2), may be cancelled by

the last registering authority on proof of

the termination of the said agreement by

the parties concerned on an application

being made in such form as the Central

Government may prescribe and an intimation

in this behalf shall be sent to the

original registering authority if the last

registering authority is not the original

registering authority.

(4) No entry regarding the transfer of

ownership of any motor vehicle which is

held under the said agreement shall be

made in the certificate of registration

except with the written consent of the

person whose name has been specified in

the certificate of registration as the

person with whom the registered owner has

entered into the said agreement.

XXXXXXXXXXXXXX”

12. From the facts, which have been brought on the

record, it is clear that when the vehicle was

initially registered at Regional Transport Office,

Basti, the name of original owner was Amarnath Yadav

and entry in the name of appellant as the person with

whom the vehicle was hypothecated was there in the

registration certificate. Rule 61 of The Central

Motor Vehicle Rules, 1989 deals with termination of

hire purchase agreement etc. Rule 61, which is

relevant is as follows:-

“61. Termination of hire-purchase

agreements, etc.—(1) An application for

making an entry of termination of

agreement of hire purchase, lease or

hypothecation referred to in sub-section

(3) of section 51 shall be made in Form 35

duly signed by the registered owner of the

vehicle and the financier, and shall be

accompanied by the certificate of

registration and the appropriate fee as

specified in rule 81.

(2) The application for the issue of a

fresh certificate of registration under

sub-section (5) of section 51 shall be

made in Form 36 and shall be accompanied

by a fee as specified in rule 81.

(3) Where the registered owner has

refused to deliver the certificate of

registration to the financier or has

absconded then the registering authority

shall issue a notice to the registered

owner of the vehicle in Form 37.”

13. The entry of the appellant’s name in the

registration certificate of the vehicle was got

cancelled by submission of Form 35 by original owner

and thereafter fresh registration certificate in Form

23 dated 14.08.2018 was issued in the name of

Amarnath Yadav as original owner without any entry of

hypothecation. The clearance certificate dated

16.08.2018 was also issued by Regional Transport

Office, Basti for transfer of the vehicle to Ramjan

Ali within the jurisdiction of registering authority,

Sitapur. In the FIR No.08/2019 under Sections 364

and 392, the vehicle was seized on 27.01.2019. Chief

Judicial Magistrate in his order dated 04.05.2019

rejecting the application of respondent No.1 for

release has noticed the claim of the appellant, who

had filed objection to the release application. The

award dated 26.03.2018 was also placed before the

Chief Judicial Magistrate where it was noted that

outstanding amount in favour of the appellant is

Rs.25,97,053/-. Chief Judicial Magistrate noticed

the case of the appellant that original owner and the

second owner had manufactured fraudulent documents

and in collusion with the officials of the Regional

Transport Office, Basti managed to get the clearance

certificate dated 16.08.2018 whereas No Objection

Certificate could not have been issued. The Chief

Judicial Magistrate has rejected the application for

release.

14. The Regional Transport Office, Basti had passed

an order dated 29.06.2019 in exercise of power under

Section 55(5) of the Motor Vehicles Act. Section

55(5) under which the order dated 29.06.2019 was

passed is to the following effect:-

“55. Cancellation of registration.—

XXXXXXXXXXXXXX

(5) If a registering authority is

satisfied that the registration of a motor

vehicle has been obtained on the basis of

documents which were, or by representation

of facts which was, false in any material

particular, or the engine number or the

chassis number embossed thereon are

different from such number entered in the

certificate of registration, the

registering authority shall after giving

the owner an opportunity to make such

representation as he may wish to make (by

sending to the owner a notice by

registered post acknowledgement due at his

address entered in the certificate of

registration), and for reasons to be

recorded in writing cancel the

registration.

XXXXXXXXXXXXXX”

15. The order dated 29.06.2019 was filed before the

High Court, which order has been looked into and

commented by the High Court. The last paragraph of

the order of the Assistant Divisional Transport

Officer, Basti, which is relevant is as follows:-

“Under the aforementioned facts and

circumstances, I have arrived at the

conclusion that Sh. Amarnath Yadav with

the intention to cheat in a dishonest

manner had fraudulently manufactured the

Form 35 and on the basis of such fake

document had managed to get the financial

contract of the aforementioned vehicle

cancelled. It is a settled position of the

law and that of the Motor Vehicle Act that

an act which is void ab initio can never

hold good with the efflux of time. (Quad

initio vitionism est non protest tractu

temporis convales cere). Keeping in mind

the aforementioned maxim, I have arrived

at the bonefide conclusion that Sh.

Amarnath Yadav while concealing the actual

facts had submitted fraudulently

manufactured documents and thereby had

managed to get the order dated 19.6.2018

for cancellation of the financial

agreement in respect of the Vehicle No. UP

51 AT 5709 JCB and the order dated

16.8.2018 for issuance of the no-objection

certificate of the vehicle. As such, I,

while exercising the powers vested on me

U/s 55 (5) of the Central Motor Vehicle

Act 1988, do hereby set aside the

previously Issued order of cancellation of

finance agreement and the no-objection

certificate. From today i.e. from

29.6.2019, the registration certificate

issued by this office in the Form 23 in

respect of the aforementioned vehicle and

the no-objection certificate shall be

treated null and void. Sending a request

letter to the Registration Officer,

Sitapur, with the expectation that he

shall cancel the orders passed by his

office on the basis of the forms issued by

this office earlier and remit back the noobjection certificate of the vehicle to

this office. That apart, let

correspondence be made with the

Superintendent of Police, Basti to lodge

case under the appropriate sections of the

IPC for the act done by Sh. Amarnath

Yadav. Accordingly, the application dated

30.4.2019 of the Financier Srei Equipment

Finance Limited made in connection with

the Vehicle No. UP 51 AT 5709 JCB is being

finally disposed of in the light of the

aforementioned conclusion and provision of

the Law.

Sd// Registration Officer

Motor Vehicle Department, Basti”

16. The registering authority has come to the

conclusion that Form 35 on the basis of which the

entry in the name of the appellant as person with

whom the vehicle was hypothecated was fraudulently

removed. The Assistant Divisional Transport Officer

has cancelled the order dated 16.08.2016 as well as

the No Objection Certificate of the vehicle and,

thus, the registration certificate given by office of

Regional Transport Office, Basti in Form 23, which

has been filed as Annexure CA-2 to the counter

affidavit of respondent No.1 has been held to be null

and void. All subsequent proceedings including

certificate of registration obtained by respondent

No.1 on 27.08.2018 on the basis of certificate of

clearance dated 16.08.2018 shall also automatically

be treated non est. The order of the Assistant

Divisional Transport Officer, Basti dated 29.06.2019

has not been shown to have been either set aside or

stayed by any competent court. The High Court in

paragraph 10 of the judgment has noted about the

order of the Assistant Divisional Transport Officer.

The High Court has observed that the contents of the

order dated 29.01.2019 are baseless and the action of

the Assistant Regional Transport Office, Basti is

also derogatory. We fail to see that on what basis,

the High Court proceeded to make the following

observations:-

“10. ……………the contents of the order dated

29.01.2019 are baseless and the action of

ARTO, Basti is also derogatory,…………..”

17. Although High Court was right in its observation

that the record of office of Assistant Regional

Transport Office, Basti was provided by the officials

to the owner of vehicles, but there were ample

materials before Assistant Regional Transport

Officer, which were submitted by application dated

30.04.2019 of the appellant and other records

available with the Assistant Regional Transport

Officer including four notices issued to original

owner which has been noticed by Assistant Regional

Transport Officer in his order. More so, when order

of the Assistant Regional Transport Officer dated

29.06.2019 has neither been set aside nor stayed,

High Court could not have ignored the effect and

consequences of the order. The order dated

29.06.2019 having been passed in exercise of the

statutory power of the registration authority under

Section 55(5), the legal consequence of the said

order is that registration certificate issued in Form

23 by Regional Transport Office, Basti showing the

name of only Amarnath Yadav with no entry of

appellant has been treated to be null and void.

18. The High Court in its order has relied on

judgment of this Court in Manoj and Ors. Vs. Shriram

Tpt. Finance Co. Ltd. and Ors., JT 2002(1) SC 293,

where this Court has observed that vehicle having

been released in favour of the registered owner

though it was open for the financier to approach in

the civil court for proper relief. In the above

case, the motor vehicle was registered in the name of

the appellant Manoj Sharma. On his application, the

Magistrate has directed for release of the vehicle in

favour of Manoj Sharma. The said order was reversed

by the High Court in revisional jurisdiction. The

argument which was made before this Court was that

there was a civil suit pending where an order of

status quo was passed due to which the High Court was

not justified in releasing the vehicle to Manoj

Sharma. In the above case, this Court in paragraph 4

of the judgment has made following observations:-

“4. Mr. Rao appearing for the financier

vehemently contended that in view of the

pendency of the civil suits, and the order

of the status quo passed therein, the

magistrate was not justified in passing

the order granting the vehicle in

possession of Shri Manoj Sharma. We do not

find any substance in the aforesaid

contention inasmuch as the magistrate has

categorically held in the order that the

order delivering possession of the

property to Shri Manoj Sharma is subject

to any variation to be made by the civil

court. If the financier was aggrieved by

the order directing release of the vehicle

in favour of Shri Manoj Sharma, who

continues to be the registered owner of

the vehicle, it was open for the financier

to approach the civil court in the pending

civil suit for interference. In this view

of the matter, we set aside the impugned

order of the High Court and direct that

the order of the magistrate dated 3.4.2000

be complied with, and in case Shri Manoj

Sharma furnishes a necessary bond to the

extent of Rs. 5 lacs, then the vehicle

could be given to Shri Manoj Sharma, which

would be subject to any variation of the

order by the civil court.”

19. In the above case, there was no dispute that

Manoj Sharma was registered owner of the vehicle. The

present is a case where registration certificate

which was issued by Regional Transport Office, Basti

in Form 23 stood cancelled including the setting

aside of the clearance certificate dated 16.08.2018.

The subsequent registration obtained from Regional

Transport Office, Sitapur on the strength of

clearance certificate dated 16.08.2018 shall also be

of no avail to the respondent No.1 in view of

registration certificate having been set aside on

29.06.2019. The above case, thus, has been wrongly

relied by the High Court in support of the claim of

the respondent No.1.

20. The statutory authority while cancelling the

registration certificate of the vehicle issued by

Regional Transport Office, Basti in Form 23 has

recorded his conclusion that entry of the appellant

as a person in whose favour the vehicle was

hypothecated, which was there in the original

registration certificate has been fraudulently

deleted. In consequence of above, all subsequent

acts including the registration certificate issued in

the name of respondent No.1 by Regional Transport

Office, Sitapur became non est. The respondent No.1

although claimed that he is a bonafide purchaser but

fact remains that he is beneficiary of fraud.

21. The High Court unduly influenced by the fact that

application for release of vehicle was filed by

respondent No.1, the High Court lost sight of the

fact that the appellant has also filed objection to

the application of release filed by respondent No.1

objecting the release and claiming itself to be

entitled to the vehicle as being person with whom the

vehicle was hypothecated, whose hypothecation entry

was fraudulently removed to facilitate the transfer

in favour of respondent No.1, which was illegal and

void.

22. The High Court in paragraph 9 has observed that

registration certificate obtained from the office of

Regional Transport Office, Basti, was in the name of

Amarnath Yadav as registered owner with no

endorsement of hypothecation, which fact was relied

by the High Court in the impugned order. The High

Court failed to notice that entry of hypothecation of

the vehicle in favour of the appellant was very much

there in the original registration certificate, which

entry was got deleted by submitting a forged Form 35

by original owner, which finding has been recorded in

the order of Assistant Regional Transport Officer

dated 29.06.2019 cancelling the registration

certificate on which reliance has been placed by the

High Court in paragraph 9. The basis of the order of

the High Court was the certificate of registration in

name of Amarnath Yadav, which has been filed before

us as Annexure CA-2. Without considering the fact

that by order dated 29.06.2019, the said certificate

stood cancelled and was declared void and non est,

the High Court decided in favour of respondent No.1.

23. In view of the foregoing discussions, we are of

the considered opinion that the High Court committed

error in directing the release of the vehicle in

favour of respondent No.1 in whose name the vehicle

was registered at Regional Transport Office, Sitapur,

but in view of order dated 29.06.2019, the

registration in favour of Amarnath Yadav (CA-2) and

of certificate of clearance dated 16.08.2018 having

been set aside, there was no right in respondent No.1

to claim the release of the vehicle. The order of

the High Court, thus, is unsustainable and is hereby

set aside. We further order that vehicle No. UP 51

AT 5709 be released in favour of the appellant.

Chief Judicial Magistrate, Sitapur shall ensure that

vehicle is received back from respondent No.1 and

released in favour of appellant on such terms and

conditions as may be deemed fit and proper, which

exercise shall be completed within a period of four

weeks from today. The appeal is allowed accordingly.

......................J.

( ASHOK BHUSHAN )

......................J.

( R. SUBHASH REDDY )

......................J.

( M.R. SHAH )

New Delhi,

January 05, 2021.

taken note of the compromise between parties to reduce the sentence of the convicts even in serious noncompoundable offences.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.24/2021

[Arising out of SLP (Crl.) 10813 of 2019]

Murali .....APPELLANT

VERSUS

State rep. by the Inspector of Police .....RESPONDENT

WITH

CRIMINAL APPEAL NO.25/2021

[Arising out of SLP (Crl.) 10814 of 2019]

Rajavelu .....APPELLANT

VERSUS

State rep. by the Inspector of Police .....RESPONDENT

ORDER

Leave granted.

2. These connected appeals have been preferred against the judgment

dated 01.11.2018 of the High Court of Madras which upheld Murali’s

(appellant in SLP (Crl) No 10813/2019) conviction under Sections 324 and

341 of the Indian Penal Code, 1860 (“IPC”) with a sentence of three

Page | 1

months’ rigorous imprisonment, and Rajavelu’s (appellant in SLP (Crl)

10814/2019) conviction under Sections 307 and 341 of IPC and sentence of

five years’ rigorous imprisonment.

3. The prosecution case, in brief, is that on 07.08.2005, one Senthil had

a verbal altercation with Kumar (original accused no. 3) and Krishnan

(original accused no. 5) during a volleyball match. The injuredvictim (Sathya

@ Sathiyajothi) came to the aid of his friend Senthil and opposed both

Kumar and Krishnan. Thereafter at about 2:30PM on 09.08.2005, the

appellants – Rajavelu and Murali (original accused nos. 1 and 2) along with

Muthu, Kumar and Krishnan (original accused nos. 3, 4 and 5) cornered the

victim and assaulted him. Murali allegedly struck the victim on his head

with a hockey stick and Rajavelu tried to kill him by giving a neck blow with

a Veechu Aruval (sharpedged object), which was fortunately blocked by the

victim. In the process, the left hand of the victim and the thumb and finger

of his right hand got severed. The victim was able to escape and the matter

was reported by his friend, PW1. All five persons were arrested. It further

led to registration of Crime No. 531 of 2005 under Sections

147,148,341,352, 323, 324, 307 and 34 of the IPC.

4. Relying upon the testimony of the victim (PW3), which was held to be

unimpeachable and stellar, the Assistant Sessions Judge cum Chief

Judicial Magistrate, Cuddalore, vide his judgment dated 28.01.2012 held

Murali guilty of wrongfully restraining the victim and voluntarily causing

Page | 2

hurt with a dangerous weapon. Based upon the medical evidence and

recovery of the Veechu Aruval from Rajavelu, the trial Court further opined

that the secondappellant (Rajavelu) had a clear intention to murder the

victim and that if not for the victim defending himself, a fatal injury would

have been caused to his neck and he would have died instantaneously.

Consequently, a concurrent sentence of three months’ rigorous

imprisonment under Section 324 IPC and onemonth rigorous

imprisonment under Section 341 IPC was imposed on Murali, and Rajavelu

was awarded five years’ rigorous imprisonment under Section 307 IPC and

another one month rigorous imprisonment under Section 341 IPC. Muthu,

Kumar and Krishnan were acquitted as there was no specific allegation by

the victim and no weapon or injury had been attributed to them by the

prosecution.

5. The convictappellants challenged the aforestated judgment before

two forums, both of which unanimously upheld their conviction. The

Additional DistrictcumSessions Judge dismissed the first appeal through

an order dated 20.08.2013 and their criminal revision petition before the

High Court also met with the same fate vide an order dated 01.11.2018.

6. Unsatisfied still, the appellants have approached this Court seeking

special leave to appeal against the High Court’s dismissal of their

conviction. However, through an application filed on 22.11.2019, they have

sought to implead the injuredvictim and get their offences compounded

Page | 3

based on mutual resolution and peaceful settlement between the parties.

This Court, nevertheless, issued limited notice only on the quantum of

sentence.

7. The records of the case elicit that the findings of all three preceding

forums are concurrent and without fault. Not only have the appellants been

unable to mount an effective challenge founded upon a question of law,

their learned Counsels, given the subsequent events and change in

circumstances, have very fairly restricted their prayer qua reduction of

sentence only.

8. A perusal of the applications for impleadment and compounding

makes it clear that the parties have on the advice of their elders entered into

an amicable settlement. The appellants have admitted their fault, taken

responsibility for their actions, and have maturely sought forgiveness from

the victim. In turn, the victim has benevolently acknowledged the apology,

and considering the young age of the appellants at the time of the incident,

has forgiven the appellants and settled the dispute. Learned Counsel for the

victimapplicant has reiterated the same stance during oral hearings also.

9. There can be no doubt that Section 320 of the Criminal Procedure

Code, 1973 (“CrPC”) does not encapsulate Section 324 and 307 IPC under

its list of compoundable offences. Given the unequivocal language of Section

320(9) CrPC which explicitly prohibits any compounding except as

permitted under the said provision, it would not be possible to compound

Page | 4

the appellants’ offences.

10. Notwithstanding thereto, it appears to us that the fact of amicable

settlement can be a relevant factor for the purpose of reduction in the

quantum of sentence. In somewhat similar circumstances where the parties

decided to forget their past and live amicably, this Court in Ram Pujan v.

State of UP [(1973) 2 SCC 456], held as follows:

“6. The only question with which we are concerned, as mentioned earlier,

is about the sentence. In this respect we find that an application for

compromise on behalf of the injured prosecution witnesses and the

appellants was filed before the High Court. It was stated in the application

that the appellants and the injured persons, who belong to one family, had

amicably settled their dispute and wanted to live in peace. The High Court

thereupon referred the matter to the trial court for verification of the

compromise. After the compromise was got verified, the High Court passed

an order stating that as the offence under Section 326 of the Penal Code,

1860 was noncompoundable, permission to compound the offence could

not be granted. The High Court all the same reduced the sentence for the

offence under Section 326 read with Section 34 of the Penal Code, 1860

from four years to two years.

7. The appellants during the pendency of the appeal were not released on

bail and are stated to have already undergone a sentence of rigorous

imprisonment for a period of more than four months. As the parties who

belong to one family have settled their dispute, it is, in our opinion, not

necessary to keep the appellants in jail for a longer period. The major

offence for which the appellants have been convicted is no doubt

noncompoundable, but the fact of compromise can be taken into

account in determining the quantum of sentence. It would, in our

Page | 5

opinion, meet the ends of justice if the sentence of imprisonment

awarded to the appellants is reduced to the period already

undergone provided each of the appellants pays a fine of Rs 1500 in

addition to the period of imprisonment already undergone for the offence

under Section 326 read with Section 34 of the of the Penal Code, 1860. In

default of payment of fine, each of the appellants shall undergo rigorous

imprisonment for a total period of one year for the offence under Section

326 read with Section 34 of the of the Penal Code, 1860. Out of the fine, if

realised, Rs 2000 should be paid to Ram Sewak and Rs 2000 to Ram

Samujh as compensation. We order accordingly.”

(emphasis supplied)

11. The aforecited view has been consistently followed by this Court

including in Ishwar Singh v. State of MP [(2008) 15 SCC 667], laying

down that:

“13. In Jetha Ram v. State of Rajasthan [(2006) 9 SCC 255 : (2006) 2 SCC

(Cri) 561] , Murugesan v. Ganapathy Velar [(2001) 10 SCC 504 : 2003 SCC

(Cri) 1032] and Ishwarlal v. State of M.P. [(2008) 15 SCC 671 : JT (1988) 3

SC 36 (1)] this Court, while taking into account the fact of compromise

between the parties, reduced sentence imposed on the appellantaccused

to already undergone, though the offences were not compoundable. But it

was also stated that in Mahesh Chand v. State of Rajasthan [1990 Supp

SCC 681 : 1991 SCC (Cri) 159 : AIR 1988 SC 2111] such offence was

ordered to be compounded.

14. In our considered opinion, it would not be appropriate to order

compounding of an offence not compoundable under the Code

ignoring and keeping aside statutory provisions. In our judgment,

however, limited submission of the learned counsel for the

appellant deserves consideration that while imposing substantive

Page | 6

sentence, the factum of compromise between the parties is indeed a

relevant circumstance which the Court may keep in mind.

15. In the instant case, the incident took place before more than fifteen

years; the parties are residing in one and the same village and they are

also relatives. The appellant was about 20 years of age at the time of

commission of crime. It was his first offence. After conviction, the petitioner

was taken into custody. During the pendency of appeal before the High

Court, he was enlarged on bail but, after the decision of the High Court, he

again surrendered and is in jail at present. Though he had applied for bail,

the prayer was not granted and he was not released on bail. Considering

the totality of facts and circumstances, in our opinion, the ends of justice

would be met if the sentence of imprisonment awarded to the appellant

(Accused 1) is reduced to the period already undergone.”

(emphasis supplied)

12. In later decisions including in Ram Lal v. State of J&K, [(1999) 2

SCC 213], Bankat v. State of Maharashtra, [(2005) 1 SCC 343], Mohar

Singh v. State of Rajasthan [(2015) 11 SCC 226], Nanda Gopalan v.

State of Kerala [(2015) 11 SCC 137], Shankar v. State of Maharashtra,

[(2019) 5 SCC 166], this Court has taken note of the compromise between

parties to reduce the sentence of the convicts even in serious noncompoundable offences.

13. Given this position of law and the peculiar circumstances arising out

of subsequent events, we are of the considered opinion that it is a fit case to

take a sympathetic view and reconsider the quantum of sentences awarded

to the appellants. We say so because: first, the parties to the dispute have

Page | 7

mutually buried their hatchet. The separate affidavit of the victim inspires

confidence that the apology has voluntarily been accepted given the efflux of

time and owing to the maturity brought about by age. There is no question

of the settlement being as a result of any coercion or inducement.

Considering that the parties are on friendly terms now and they inhabit the

same society, this is a fit case for reduction of sentence.

14. Second, at the time of the incident, the victim was a college student,

and both appellants too were no older than 2022 years. The attack was in

pursuance of a verbal altercation during a sports match, with there being no

previous enmity between the parties. It does raise hope that parties would

have grown up and have mended their ways. Indeed, in the present case,

fifteen years have elapsed since the incident. The appellants are today in

their midthirties and present little chance of committing the same crime.

15. Third, the appellants have no other criminal antecedents, no previous

enmity, and today are married and have children. They are the sole bread

earners of their family and have significant social obligations to tend to. In

such circumstances, it might not serve the interests of society to keep them

incarcerated any further.

16. Finally, both appellants have served a significant portion of their

sentences. Murali has undergone more than half of his sentence and

Rajavelu has been in jail for more than one year and eight months.

Page | 8

17. Considering all these unique factors, including the compromise

between the parties, we deem it appropriate to reduce the quantum of the

sentence imposed on the appellants. The appeals are, therefore, partly

allowed and sentence of both the appellants is reduced to the period

already undergone by them. Consequently, they are set free and their bail

bonds, if any, are discharged. Any pending applications are disposed of

accordingly.

………………………………………….. J.

(N.V. RAMANA)

…………………………………………… J.

(SURYA KANT)

…………………..………………………. J.

(ANIRUDDHA BOSE)

NEW DELHI

DATED : 05012021

Page | 9

The dispute which ensued regarding the appointment of Warden of the College Hostel arose due to the fact that position regarding procedure and right to make appointment on the post of Warden was not clear and the claim was raised by the Principal on the strength of letter of the University Grants Commission dated 19.02.1987 which we have dealt as above. From the discussion as above, it is clear that it is the Governing Body of the College which has the 34 authority to appoint Warden of the College Hostel. However, the Principal being Executive head of the entire College and being in position to know the members of the staff as per prevailing practice the applications are to be invited through the Principal of the College and after receipt of the applications the applications along with recommendation of the Principal may be placed before the Governing Body which is to take decision regarding appointment of the Warden of the Hostel of the College.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 13 Of 2021

(Arising out of SLP(C)No.8053 of 2019)

THE CHAIRPERSON GOVERNING BODY

DAULAT RAM COLLEGE ...APPELLANT(S)

VERSUS

DR. ASHA & ORS. ...RESPONDENT(S)

J U D G M E N T

ASHOK BHUSHAN, J.

Leave granted.

2. This appeal has been filed by the appellant

questioning the judgment dated 06.03.2019 of the

Division Bench of Delhi High Court issuing certain

directions in LPA No.316 of 2018 filed by respondent

No.1-Dr. Asha, although not interfering with the

judgment of the learned Single Judge dated 09.03.2018

disposing of the writ petition filed by Dr. Asharespondent No.1. The appellant aggrieved by the

directions issued by the Division Bench has filed this

appeal.

3. Brief facts giving rise to this appeal are:

Daulat Ram College is affiliated to the

University of Delhi since 1960. The Hostel of the

Daulat Ram College is an integral part of the College.

The Daulat Ram College Society is a registered Society

which was established on 03.03.1960 which in turn has

established Daulat Ram College (hereinafter referred

to as the ‘College’). The Daulat Ram College Society

has a Memorandum of Association as well Rules. The

College has a Governing Body which is approved by the

Executive Council of the University (Delhi

University). We in the present case are only concerned

with the Hostel of the Daulat Ram College and that too

appointment of Warden of the Hostel of the College.

The Governing Body of the College has been appointing

the Warden of the Hostel of the College.

4. On 10.09.2013, respondent No.4-Dr.Kavita Sharma

was unanimously appointed as Warden of the College by

the Governing Body with effect from 12.09.2013 for a

period of two years. The two years’ term of respondent

No.4 as Warden was going to end on 11.09.2015, the

Governing Body of the College vide its Resolution

dated 11.09.2015 re-appointed respondent No.4 as

Warden of the College for two years. The Governing

Body of the College directed the Principal to seek her

willingness/ unwillingness in writing and in case she

is willing, to issue her a letter of appointment with

effect from 12.09.2015. The Principal issued a letter

dated 15.09.2015 informing respondent No.4 that her

term of appointment as Warden of the Hostel of the

College has been extended upto 12.05.2016. The

Chairperson of the Governing Body wrote to respondent

No.3, Principal of the College questioning the letter

dated 15.09.2015 appointing respondent No.4 for a

period of eight months only. The Chairperson of

Governing Body informed that re-appointment was for a

period of two years and explanation was called from

respondent No.3 as to why she has not complied with

the order of the Governing Body. The Chairperson

issued a letter dated 02.05.2016 to respondent No.3

sending agenda for the meeting scheduled to be held on

07.05.2016.

5. The Principal on 02.05.2016 issued notice

inviting applications from permanent teachers who are

interested to work as Warden of College Hostel. Dr.

Asha submitted her application. The Principal,

respondent No.3 issued a letter dated 06.05.2016

appointing respondent No.1-Dr. Asha as Warden of the

College Hostel and she was directed to assume charge

on 21.05.2016. In the meeting of the Governing Body it

was noted that vide Resolution dated 11.09.2015

respondent No.4 was appointed for a period of two

years which term was to expire on 11.09.2017. It was

resolved that necessary letters containing the term of

appointment be sent accordingly. On 21.05.2016 a show

cause notice was issued to respondent No.1 asking her

to explain how she illegally and willfully attempted

to occupy the post of the Hostel Warden when she was

aware that respondent No.4 was the Hostel Warden

appointed by the Governing Body vide its Resolution

dated 11.09.2015 for a term of two years. Respondent

No.1 wrote a letter on 24.05.2016 to the Chairperson,

Governing Body asking that show cause notice issued to

her being unwarranted and not based on facts be

withdrawn. The Principal wrote on June 9/14, 2016 to

the Manager, Indian Overseas Bank informing that

respondent No.1 has been appointed as a Hostel Warden

with effect from 21.05.2016 for two years and she will

operate the College Hostel Accounts with effect from

21.05.2016. On 13.06.2016, the University of Delhi

wrote a letter to respondent No.3 that appointment of

Warden in a College Hostel is purely an administrative

affair of the College and the University has no role

to play in this behalf. The Principal was advised to

act as per clause 6-A(5)(b)(iii) of Ordinance XVIII of

the University.

6. In the Minutes of the meeting of the Governing

Body dated 24.06.2016 it was recorded that the

Principal has illegally appointed Dr. Asha as Warden

of the Hostel of the College. The Governing Body

resolved that earlier status quo be maintained and

respondent No.4, Dr. Kavita Sharma would continue as

the Warden till such time that proper guidelines for

appointment of Warden are made by the Governing Body

Hostel Committee. Respondent No.3 recorded her dissent

in the meeting dated 24.06.2016. The Principal issued

a notice dated 30.07.2016 inviting applications from

interested permanent teachers of the College for the

post of Warden in the College Hostel. Respondent No.1

filed a Writ Petition No.7289 of 2016 praying for

issuing a writ, order or direction in the nature of

mandamus and/or certiorari directing respondent Nos.2

and 3, i.e., the Principal and Chairperson of the

Governing Body to withdraw the notice dated

30.07.2016, declaration was sought that notice dated

30.07.2016 is illegal and unconstitutional. The

petitioner’s case in the writ petition was that she

was appointed as Warden of the Hostel of the College

by Principal vide letter dated 06.05.2016 for a period

of two years and took charge on 21.05.2016. The

allegations were made against the Chairperson,

Governing Body that she has created obstruction in the

functioning of the writ petitioner.

7. Learned single Judge vide order dated 19.08.2016

passed an order of the status quo regarding the

petitioner’s position as Warden of the Daulat Ram

College Hostel. Counter-affidavit was filed by the

Governing Body. Learned Single Judge after hearing the

parties passed a detailed order dated 25.11.2016

vacating the interim order dated 19.08.2016. Against

order dated 25.11.2016 Letters Patent Appeal was filed

by respondent No.3, Principal, Daulat Ram College

where order dated 22.12.2016 was passed by the

Division Bench directing the matter to be listed on

10.01.2017 till such time, status quo as of that day

be maintained. The Division Bench also passed several

orders subsequently and made it clear that pendency of

the appeal shall not come in the way of the learned

Single Judge in deciding the writ petition. Learned

Single Judge by judgment dated 09.03.2018 disposed of

writ petition.

8. Learned Single Judge found that the appointment

of the Warden in the College Hostel is the

administrative affair of the College. The learned

Single Judge held that appointment of the writ

petitioner as Warden in the College Hostel by the

Principal is irregular. In paragraph 14 following was

held:

“14. In the facts and circumstances of

this case, this petition and application

are disposed of with direction to the

Governing Body of respondent-College, for

the post of Warden in question and it be

placed before the Staff Council of

respondent-College, who shall make

recommendation for the post of Warden in

the College Hostel within a period of

four weeks and the said recommendation be

considered by the Governing Body of

respondent-College within two weeks

thereafter, so that the post in question

is expeditiously filled up.”

9. Aggrieved by the judgment of the learned Single

Judge dated 09.03.2018, LPA No.316/2018 was filed by

Dr. Asha-respondent No.1. The Chairperson, Governing

Body wrote to the Principal and other members to

initiate process for the appointment of the Warden. On

Principal not initiating the process of the

appointment, the Governing Body convened a meeting on

07.04.2018. The applications were also invited for the

post of Hostel Warden. Respondent No.4 applied in

pursuance of the application. On 07.04.2018 Governing

Body in its meeting resolved to appoint respondent

No.4 as Warden of the College Hostel. Thereafter an

interim order dated 01.05.2018 was passed by the

Division Bench. On 22.05.2018 Letters Patent Appeal

was filed by respondent No.1 against the judgment

dated 09.03.2018 of the Learned Single Judge.

10. The Division Bench decided the LPA vide judgment

dated 06.03.2019. The Division Bench although did not

interfere with the direction of the learned Single

Judge but in addition issued various directions. The

Division Bench vide its direction in paragraph 41

directed for issue of notice by the Principal of the

College inviting applications for appointment of

Warden of the Hostel, which applications were required

to be placed before the Staff Council which was to

take a decision thereon and make its recommendations

not later than 01.04.2019 and recommendations were to

be placed before the Governing Body. Paragraph 41 of

the Division Bench judgment is to the following

effect:

“41. The Court, while not interfering with

the directions issued by the learned Single

Judge in the impugned order, issues the

following directions:

(i) Within a period ten days from today, and

in any event not later than 18th March 2019,

a notice will be issued by the Principal of

the College inviting applications for

appointment as Warden of the Hostel from

amongst the teaching Staff, not limited to

the Teachers living on campus, but subject to

the undertaking given by the applicant (if

living outside the campus) that if appointed

as Warden she will stay on campus in the tworoom set in the Hostel building.

(ii) The applications received will be placed

before the Staff Council which will take a

decision thereon and make its recommendations

not later than 1st April 2019.

(iii) The recommendations of the Staff

Council shall then be placed before the GB by

the Principal forthwith, and in any event not

later than 3rd April 2019.

(iv) The GB will meet and take a decision on

such recommendation of the Staff Council not

later than 10th April 2019.

(v) If for some reason the GB does not accept

the recommendations of the Staff Council, it

will give its reasons, which will form part

of the minutes of its meeting and send the

minutes to the Staff Council not later than

15th April 2019. In such event, the Staff

Council will again convene and make a fresh

recommendation from among the remaining

applicants and this will be placed before the

GB not later than 17th April 2019. The GB

will be bound such recommendation and will

take a decision on the appointment of the

Warden not later than 20th April 2019. Dr.

Kavita Sharma, if not appointed as Warden in

the above process, shall immediately hand

over charge to the newly appointed Warden.

Likewise, the Matron would abide by the

directions issued in para 39 above.

(vi) The minutes of the meetings of the Staff

Council and the GB in compliance with the

above directions will be placed before the

Court on the next date.”

11. Aggrieved by the judgment of the Division Bench

dated 06.03.2019, the Chairperson, Governing Body,

Daulat Ram College has filed this appeal. While

issuing notice in this appeal on 05.04.2019 following

order was passed by this Court:

“Issue notice.

Till the next date the warden, who is

as on date looking to the affairs of the

hostel, shall continue."

12. We have heard learned counsel for the appellant

and learned counsel appearing for the respondents.

13. Learned counsel for the appellant submits that

appointing authority of Warden of the College Hostel

is the Governing Body of the College. The appointment

of respondent No.1 was directly made by the Principalrespondent No.3 on 06.05.2016 without approval of the

Governing Body which was an illegal appointment.

Learned counsel submits that both learned Single Judge

and Division Bench having found the appointment of

respondent No.1 illegal, the appointment made by the

Governing Body in pursuance of judgment of the learned

Single Judge ought to have been maintained. There was

no occasion for directing fresh appointment as has

been directed by the learned Division Bench of the

High Court. It is submitted that Delhi University vide

its letter dated 23.10.2013 and letter dated

02.08.2016 had clarified that the appointment of

Warden and Matron in College Hostel is purely an

administrative affair of the College and the

University of Delhi has no role to play in this

regard. It is submitted that Ordinance XVIII, 6A(5)

(b)(iii) does not confer any authority to Staff

Council to appoint a Warden of the Hostel of the

College. It is further submitted that the letter of

the University Grants Commission dated 19.02.1987 does

not confer any authority on the Principal to make

appointment of Warden of the Hostel of the College. It

is submitted that the learned Division Bench has

issued various directions which encroach on the right

of the Governing Body to exercise its jurisdiction of

the appointing authority of the Warden of the Hostel

of the College.

14. Learned counsel appearing for respondent No.3

submits that Daulat Ram College is affiliated to the

University of Delhi and 95% grants is funded from

University Grants Commission and only 5% of the funds

is to be paid by the Society-Trust. The letter dated

19.02.1987 was written by the University Grants

Commission in response to the letter of the ViceChancellor, University of Delhi and said letter was

ratified by the Executive Council of the University in

its meeting dated 25.04.1987 that it is the Principal,

who is the appointing authority of the Warden of the

Hostel of the College. The Principal, being the

administrative head of the College, is entitled to

make appointment. It is also submitted that Staff

Council also has no role in the appointment of Warden

which is in the domain of the Principal of the

College.

15. Learned counsel appearing for respondent No.1 has

adopted the submissions made by the learned counsel

for respondent No.3. It is submitted that after

judgment of the Division Bench, Staff Council in its

meeting dated 01.04.2019 has recommended respondent

No.1 for appointment as the Warden of the Hostel of

the College, there is no power in the Chairperson of

the Governing Body to appoint any one of her choice as

Warden of the Hostel of the College.

16. On behalf of respondent No.2, it has been

submitted that the appointment of an existing teaching

staff in an honorary capacity as Warden of a College

Hostel is not specifically provided for under any of

the provisions of University of Delhi Act, 1922,

Statutes, and Ordinance. It is submitted that all

Colleges which are affiliated to or constituent of

University of Delhi follow the practice of inviting

applications from interested teachers of their

respective Colleges by putting up a notice by the

Principal of the College and thereafter Principal

recommends/shortlist the name for appointment

whereafter the Governing Body grants approval and the

procedure for appointment takes thereafter.

17. We have considered the submissions of the learned

counsel for the parties and have perused the records.

18. Only two questions arise for consideration in

this appeal:

(1) Whether it is the Principal of the College

who is empowered to appoint Warden of the

Hostel of the College or it is the Governing

Body in whom the power to appoint Warden is

vested ?, and

(2) what is the procedure to be adopted before

making appointment of Warden of the College

Hostel ?

19. Both the questions being inter-related are being

taken together.

20. The claim of the Principal as well as respondent

No.1 that it is the Principal who is the appointing

authority of Warden of the College Hostel is based on

letter of the University Grants Commission dated

19.02.1987. The letter dated 19.02.1987 was written by

the Secretary of University Grants Commission to the

Vice-Chancellor of the Delhi University regarding

revising the existing staffing pattern in the Hostels

of the Colleges affiliated to Delhi University. The

above letter has been brought on record as AnnexureP2. It is useful to extract the entire letter which is

to the following effect:

“UNIVERSITY GRANTS COMMISSION

BAHADURSHAH ZAFAR MARG NEW DELHI

D.O.NO.F.1-4/B84/884(NP-II) Vol.II

February 19, 1987

Dear Professor Moonis Raza

Kindly refer to your office DO letter No.

DC/632/87 dated 3rd February, 1987 regarding

revising the existing staffing pattern in the

hostels of colleges affiliated to Delhi

University in accordance with the

recommendation of the Committee appointed by

the University.

The proposal has been considered in the

light of the information earlier furnished by

the University vide letter No.DSW/85/9391 dated

17th October, 1985 which was required to

streamline the rules about fees charged and

facilities provided in the hostels of the

central universities. We find that there is a

need to revise the staffing pattern in the

hostel mess staff which was fixed as far back

as in 1971.

Though the Warden has been desired to be

provided for the women’s hostels, it is felt

that each hostel should have a warden who

should be responsible for all hostel

administration in the college and he/she should

be appointed by the Principal from amongst

senior teachers in the college. As an incentive

for this extra work an allowance of Rs.300/- pm

be paid. In order to have the accounts of the

hostel up to date and in perfect order a need

for providing a clerk is also felt as a

necessity. Since some of the hostels are also

having the services of Chowkidar/Mali Safai

Karamchari to be left categories provided the

total staff in Group D for hostel mess staff

does not exceed the prescribed limit of

additional four.

In view of the above the commission agrees

to provide the following additional staff for

the smooth functioning of the hostel

activities:

1.Warden (One) To be paid Rs.30/- per month

3.Clerk (One) In the scale of pay of Rs.950-

1500.

3.Ground D In the scale of pay of

employees Rs.(four)in the category 750-

940. of Chowkidar/Mali/Safai

Karamchari

The provision of the above staff will be

effective from 1st January, 1987 and the

pattern of funding will be the same as for the

payment of maintenance grant to Delhi Colleges

i.e. 100% 95% as the case may be. You are

requested to bring this decision to the notice

of the concerned colleges having hostel

facilities with a request that they should send

2 separate statements of accounts in respect of

staff working in the hostels on the existing

pattern and on the basis of the revised pattern

with the accounts of the college for the year

1986-87.

With regards,

Yours sincerely,

(S.P. Gupta)

Prof. Moonis Raza,

Vice-Chancellor,

University of Delhi.”

21. The emphasis has been laid by the counsel for

respondent No.2-University of Delhi on the following

sentence occurring in the letter:

“…it is felt that each hostel should have

a warden who should be responsible for all

hostel administration in the college and

he/she should be appointed by the

Principal from amongst senior teachers in

the college.”

22. The letter of the Secretary dated 19.02.1987

communicates the decision of the Commission. The last

portion of the letter incorporates decision of the

Commission beginning with the word:

“In view of the above the commission agrees

to provide the following additional staff for

the smooth functioning of the hostel

activities:

1.Warden (One) To be paid Rs.30/- per month…”

23. A careful reading of the aforesaid letter

indicates that the decision of the Commission which

was communicated by the Secretary was the decision of

the University Grants Commission to provide additional

staff for smooth functioning of the Hostel of the

College. The Commission neither took decision

regarding appointment of the Warden nor such decision

was communicated by the said letter.

24. It is further submitted that the above decision

of the University Grants Commission dated 19.02.1987

has been ratified by the Executive Council of the

Delhi University vide its minutes dated 25.04.1987. In

the counter-affidavit filed by respondent No.3 the

minutes of the Executive Council dated 25.04.1987 are

filed in which proceeding, Item No.15, the letter of

the University Grants Commission dated 19.02.1987 has

been referred to and the decision taken by the

Executive Commission was recorded. The relevant

minutes of the proceeding of Item No.15 is as follows:

“15. Resolved that receipt of the following

letters from the University Grants Commission and

the Government of India and the action taken

thereon wherever necessary be recorded:-

Letters from the U.G.C.

Letter No.& Date Subject

1. … …

2. … …

3. … …

4. F.I-4/84(NP-II) Conveying the Commissions

Vol.II, dated approval to(i) raising the

19.2.1987 funding pattern of Salaries

of Hostel, employees from

75% to 95% (100% in case of

University maintained institutions) subject to the

condition

that the remaining 5% of the

expenditure may be made by the

Management as in the case of

College administration with no

financial burden, whatsoever,

on the students residing in

the

Hostels. (ii) Sanction for a

few additional posts for

smooth

functioning of Hostel

activities.”

25. A perusal of the above minutes of the Executive

Council of the Delhi University indicates that what

Executive Council noticed in the minutes is that the

Commission has approved the raising of the funding

pattern of salaries of the employees of the Hostel

from 75% to 95% and the remaining 5% of the

expenditure was to be made by the Management as in the

case of College administration with no financial

burden on the students residing in the Hostels. Only

to the extent of the above part of the decision of the

Commission the Executive Council reiterated and there

was no decision by the University that appointment of

Warden of the Hostel is to be made by the Principal of

the College.

26. The University has filed counter-affidavit in the

writ petition before the High Court where it has

categorically taken the stand that the University Act,

Statutes and Ordinance do not provide for appointment

of the Warden of the Hostel College and it is a

private matter concerning the respective college. In

the LPA affidavit was called for and the affidavit

dated 11.01.2019 by Prof. T.K. Das, Registrar,

University of Delhi was filed. In paragraph 5 of the

said affidavit following has been stated:

“5. The appointment of an existing teaching staff

in an honorary capacity as Warden of a college is

not specifically provided for under any of the

provisions of University of Delhi Act, 1922

statutes, and Ordinance; being a private matter

concerning the respective college and University of

Delhi has no role to play. However, all the

collages, which have their own hostel and, are

affiliated or constituted of University of Delhi

follow the practice of inviting applications from

interested teachers of their respective college by

putting up notice by the Principal of said College,

willing to take on this honorary charge. Then the

Principal of the respective college considers such

application received and recommends/shortlist the

name for such appointment. Thereafter, the name of

shortlisted teacher and appointed to the honorary

post of warden is placed before the Governing Body

for approval.”

27. Two earlier letters dated 21.10.2013 and

13.06.2016 which have been brought on record as

Annexure-P7 and Annexure-P23 have also communicated

that appointment of Warden in the College Hostel is

purely an administrative affair of the College and the

University has no role to play in this behalf.

28. In view of the aforesaid, letter dated 19.02.1987

issued by the University Grants Commission cannot be

read to mean that it is Principal who is the

appointing authority of the Warden of the Hostel of

the College.

29. Learned single Judge in its judgment dated

19.08.2016 has rightly held that University Grants

Commission’s letter dated 19.02.1987 is of no avail.

26. Much emphasis has been laid by the learned

counsel for the respondent on Ordinance XVIII which

deals with “Of Colleges and Halls”. Ordinance XVIII,

6-A deals with Staff Council. 6-A relevant for the

present case is quoted hereunder:

“6-A. (1) There shall be a Staff Council in every

College.

(2) All the members of the teaching staff, the

Librarian and the Director of Physical Education

shall constitute the Staff Council.

(3) Subject to the provisions of the Act, the

Statutes and the Ordinances of the University, the

Principal shall act as Principal-in-Council in

respect of matters on which Staff Council is

required to take decisions.

ORDINANCE XVIII

(4) (a) The Principal shall be ex-officio Chairman

of the Staff Council.

(b) The Council shall elect its Secretary, who

shall hold office for a term of one year. The

Secretary may be re-elected for a second term but

no person shall hold office of Secretary for more

than two consecutive terms.

(5) (a) Subject to the provisions of the Act, the

Statutes and the Ordinances of the University, the

Staff Council shall take decisions in respect of

the following matters:

(i) Preparation of College time-table.

(ii) Allocation of extra-curricular work of

teachers not involving, payment of remuneration.

(iii) Organising extra-curricular activities,

including cultural activities of students, sports,

games, National Service Scheme and other social

services schemes and academic societies.

(iv) Laying down guide-lines for purchase of

library books and laboratory equipment in

consultation with the appropriate departments.

(v) Organising admission of students.

(b) Subject to the provisions of the Act, the

Statutes and the Ordinances of the University, the

Staff Council shall make recommendations in

respect of the following matters :

(i) Formulation of recommendations on

introduction of new teaching posts in the

departments and expansion of the existing

departments;

(ii) Formulation of admission policy within the

framework of the policy laid down by the

University;

(iii) Formulation of guidelines regarding

arrangements for the residence and welfare

of students in consultation with

appropriate students organisations;

(iv) Formulation of guide-lines regarding

discipline of the students;

(v) Formulation of policies for recommending

names of teachers for participation in

seminars and conferences and financial

assistance to teachers.

Note : The administrative staff of the College

will not be within the purview of the Staff

Council.”

30. The reliance has been placed on 6-A(5)(b)(iii),

formulation of guidelines regarding arrangements for

the residence and welfare of students in consultation

with appropriate students organisations. When we read

the Ordinance 6-A which deals with the Staff Council

of every College, clause (5)(a) provides that subject

to the provisions of the Act, the Statutes and the

Ordinances of the University, the Staff Council has to

take decisions in respect of the matters enumerated

therein. There is reliance only on clause (5)(b)(iii)

which is extracted above. Clause (5)(b) provides that

subject to the provisions of the Act, the Statutes and

the Ordinances of the University, the Staff Council

shall make recommendations in respect of the matters

mentioned therein. Formulation of guidelines regarding

arrangements for the residence and welfare of students

in consultation with appropriate students

organisations, in no manner can embrace in it the

power to make appointment of Warden. It has been

clearly stated by the University in its letters and

affidavit that it is a matter of administration of the

College and is not dealt in the Act, Statutes and

Ordinances. Had the Ordinance 6-A(5)(b)(iii)

contemplated recommendation of Staff Council for

appointment of Warden, the University could have very

well taken that stand which stand has not been taken

in the present proceedings.

31. The Delhi University has also filed a counteraffidavit in the proceedings before this Court. In the

counter-affidavit filed by the University of Delhi in

these proceedings, the stand of University of Delhi

has again been taken in paragraph 4 which is to the

following effect:

“4. The appointment of Warden of the hostel

maintained by the College

constituent/affiliated to the University of

Delhi is purely an administrative affair of the

College and the University has no role to play

in this behalf. It is respectfully submitted

that the appointment of an existing teaching

staff in an honorary capacity as Warden of a

college is not specifically provided for under

any of the provisions of the University of

Delhi Act, 1922 Statutes, and Ordinances.

However all the Colleges, which have their own

Hostel and, are affiliated or constituent of

University of Delhi, follow the practice of

inviting application from interested teachers

of their respective College by putting up

notice by the Principal of said College,

willing to take up the honorary charge. Then

the Principal of the respective College

considers such application received and

recommends/shortlist the name for such

appointment. Thereafter, the name of the

shortlisted teacher to be appointed to the

honorary post of Warden is placed before the

Governing Body of the said college for

approval. This practice has been in vogue, more

or the less in the light of the letter of UGC

dated 19.02.1987 (Annexure P-2 herein). The

Hindu college for instance also follows the

same practice.”

32. In the counter-affidavit of the University

referring to practice, the University clearly states

that appointment of Warden is purely an administrative

affair of the College and the University has no role

to play and further the same is not provided for under

any of the provisions of the University of Delhi Act,

Statutes and Ordinances. We, thus, come to the

conclusion that Ordinance XVIII 6-A(5)(b)(iii) does

not empower the Staff Council to make any

recommendation with regard to the appointment of

Warden of the College Hostel.

33. The Governing Body of the College is to

administer the affair of the College. Ordinance XVIII

Chapter VII-2 at page 47 of the paper book is to the

following effect:

“2. The Governing Body will meet at least once

in a term, and, subject as hereinafter

provided, shall have general supervision and

control of the affairs of the College and

maintain its own records of its proceedings

which shall be open to inspection by the

inspection authority.”

34. The Governing Body, thus, has general supervision

of the College. Even in the Colleges and Institutions

which are maintained by the University, it is provided

in Ordinance XX that the Governing Body which is

constituted by the Executive Council is empowered to

appoint the administrative staff of the College.

Similarly, the Governing Body of the affiliated

Colleges is empowered to appoint administrative staff

of the College. The Ordinance does not empower the

Principal to make any appointment of the Warden of the

Hostel nor any other statutory provision has been

referred which empowers the Principal to appoint

Warden of the College.

35. The Principal, however, who is entrusted the over

all internal administration of the College is a person

who knows all the staff of the College and his/her

recommendation with regard to appointment of Warden of

the College Hostel is to carry weight. The Governing

Body while making appointment of Warden of the College

Hostel has to give due weight to the recommendation of

Principal. The appointment of Warden of the Hostel is

made from amongst the permanent staff of the College,

the practice which is followed in the College and with

which there is no dispute between the parties is that

the applications are invited through notice by

Principal for appointment of Warden and after

recommendation is made by the Principal, a decision is

taken by the Governing Body is to appoint Warden.

36. With regard to the role of Staff Council in the

appointment of Warden of the Hostel, we have already

observed that Ordinances do not empower the Staff

Council to make any recommendation with regard to the

appointment of Warden. We have found that the

Principal has no authority to appoint Dr. Asharespondent No.1 as Warden in the Hostel of the College

and appointment made by the Principal was irregular.

The Division Bench also did not interfere with the

judgment of the learned Single Judge. The Division

Bench in the directions in paragraph 41 has directed

that the applications received in response to notice

for appointment of Warden to be placed before the

Staff Council which was to take a decision and make

recommendations on the said applications. We having

found that Staff Council is not statutorily empowered

to make any recommendation regarding appointment of

Warden of the College Hostel, the direction of the

Division Bench requiring placement of all applications

before the Staff Council was uncalled for. The

appointment of Warden of the Hostel being in the

domain of the Governing Body, the High Court should

have left it to the Governing Body to take appropriate

steps along with the Principal of the College for

making appointment of the Warden of the Hostel of the

College. We, thus, are of the view that directions in

paragraph 41 of the Division Bench judgment cannot be

sustained and are hereby set aside.

37. The High Court has also appointed two Advocates

as Commissioners to visit the Hostel premises. The

Commissioners visited the Hostel and submitted report

to the High Court. No further directions are needed in

the above reference.

38. Respondent No.4 in its counter-affidavit has

stated that in pursuance of direction of the learned

Single Judge, respondent No.4 was appointed by the

Governing Body as Warden of the Hostel of the College

whereas respondent No.1 claims that respondent No.1

has been appointed as Warden in pursuance of notice

issued by the Principal on 08.03.2019. The appointment

of respondent No.4 as Warden which was made subsequent

to the judgment of the learned Single Judge by the

Governing Body on 07.04.2018, the tenure of which has

come to end. The initial appointment of respondent

No.1 on 06.05.2016 as well as subsequent appointment

as claimed by respondent No.1 cannot be held to be

valid.

39. The dispute which ensued regarding the

appointment of Warden of the College Hostel arose due

to the fact that position regarding procedure and

right to make appointment on the post of Warden was

not clear and the claim was raised by the Principal on

the strength of letter of the University Grants

Commission dated 19.02.1987 which we have dealt as

above. From the discussion as above, it is clear that

it is the Governing Body of the College which has the

authority to appoint Warden of the College Hostel.

However, the Principal being Executive head of the

entire College and being in position to know the

members of the staff as per prevailing practice the

applications are to be invited through the Principal

of the College and after receipt of the applications

the applications along with recommendation of the

Principal may be placed before the Governing Body

which is to take decision regarding appointment of the

Warden of the Hostel of the College.

40. The affidavit has also been filed on behalf of

the respondent No.3 that Hostel of the College is

closed since June 2019 which has not yet been opened.

An affidavit has also been filed by the appellant

stating that Schools and Colleges were closed under

the orders issued by the Government of India, Ministry

of Home Affairs and it has to be opened in the fair

manner. The appellant submits that Schools, Colleges

and Hostels cannot be opened as of now. The issue

regarding opening of the Hostels is not being subject

matter of this appeal, we need not consider the said

issue in this appeal. It is for the University and

College administration to take a call regarding

opening of the Hostels. We, however, observe that the

Governing Body should initiate process for fresh

appointment of Warden of the Hostel of the College by

inviting applications through Principal of the College

before the Hostel is open for housing the students.

41. In the result, the directions contained in

paragraph 41 of the Division Bench judgment are set

aside. The appeal is allowed subject to observations

as above.

........................J.

( ASHOK BHUSHAN )

........................J.

( M.R. SHAH )

NEW DELHI,

JANUARY 05, 2020.

LAW FOR ALL

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Just for legal information but not form as legal opinion

Friday, January 8, 2021

whether the acceptance of a conditional offer with a further condition results in a concluded contract, irrespective of whether the offerer accepts the further condition proposed by the acceptor

taken note of the compromise between parties to reduce the sentence of the convicts even in serious noncompoundable offences.